Governor Bentley proudly announced that Alabama will give  over $70 million dollars to an out-of-state corporation to come to Alabama.

As part of the deal, the state will give the Illinois-based company as much as $40 million in cash payments over a period of time as the company hits employment benchmarks. The document says Navistar can collect $10 million for site work at the one-mile-long facility. . .

Local governments in the northwest Alabama area have also committed almost $20 million in cash incentives for the project, according to the document.

So we will continue to travel the same path to economic instability, brittleness and dependence.  Evidence continue to show the dangers of the Governor’s strategy but also show another path toward resilience and security: empowering locally owned businesses. For instance, listen to the history of Buffalo,

By 1986 three-quarters of Buffalo’s regional economy was controlled by absentee-owned firms. This economic shift from local to non-local ownership of commerce generated record profits in the earlier part of the century, but precipitated long-term social and economic losses in the latter because multinational businesses simply were not as dedicated to the area.  For instance, one study revealed that between 1965 and 1980, companies headquartered outside of the Buffalo-Niagara region were twice as likely to close as locally-based ones. When these local firms closed, and the influential families that ran them left town, they also abandoned their philanthropic responsibilities to the area. Independent business leaders were also engaged in local political and economic issues but when multinational representatives replaced them, the local political and economic discourse no longer revolved around Buffalo’s best interest. Economically, the city lost its import-substituting businesses.  Socially, it lost its community pillars.

Unfortunately Buffalo’s leaders have done little to recognize the importance of, let alone revive, the local sector.  The best example of the city’s allegiance to top-down development is Canal Side, a massive waterfront redevelopment plan, which was to be anchored by mega-retailer, Bass Pro.  The city and county took the greater part of a decade to plan this single project and earmarked $14 million for it.

But while elected leaders set aside millions for this waterfront strip mall, they gave nearly nothing to entire blocks of existing local retailers. Too often the community bears the burden of any substantive Main Street development.  One example is Grant Street, a two-mile long, distressed retail strip populated by dozens of local shops (including grocery, hardware and home supply stores).  For decades these shop owners have tightened their belts to continue serving their neighborhood and yet, between 2006 and 2009 received an appalling $21,000 in business grants from the city. Ironically, after nine years of negotiations, Bass Pro (having no real ties to the city) declined Buffalo’s multi-million dollar offer effectively stunting the area’s greatest silver-bullet development.

Doesn’t this sound like Alabama. Imagine what Alabama locally-owned businesses and communities could do with the $70 million being handed to Navistar, the latest “silver-bullet” development. What paltry sum has been invested in locally-owned businesses and historic town squares across Alabama?

Buffalo businesses and citizens though are trying to pursue an alternative path.

Residents and proprietors have embraced Buffalo First’s localism initiative for a host of reasons, the most compelling of which has been economic.  According to research firm Civic Economics, when a person patronizes local independent businesses, over three times more of their money is re-spent in the local community than had they made their purchase at a national chain.  This is critical to a struggling metro like Buffalo because it helps to root the few dollars generated by the city, in the city.  Localism makes sense because it makes cents.

Sometimes the local economic multiplier effect is far greater when businesses commit to maximize local procurement.  For example, Buffalo’s largest community-owned natural foods store, the Lexington Cooperative Market, has pledged to source locally whenever possible.  Because of this, it boasts that roughly 51 cents of each dollar spent there is re-spent in the local economy.  This happens when the Co-op uses the money that shoppers spend to pay local producers, suppliers, farmers, service providers, and the Co-op’s 70 employees.

Even though supporting local businesses provides greater economic velocity and multipliers, the best reason is:

In addition to boosting economic multipliers, businesses like the Co-op perform another key function that national businesses cannot—they create community wealth.  Larger employers may boast that they create “jobs” (even if they are low-wage) but local businesses create wealth because someone who lives in the area owns it.  Income is measured by one’s hourly wage or salary but wealth is measured by one’s assets, valuable items a person owns (such as a home, business, art or equipment) that can be converted to cash and can be passed on from one generation to the next or from one neighbor to the next.  While income helps to pay the bills, assets give people the power to put down roots, to create and to grow.  Every local proprietor in Buffalo has this advantage.

Thomas Jefferson wrote to James Madison: “the small landholders are the most precious part of a state.” He might say today, the small, locally-owner business owners are the most precious part of the state. It is this wealth-creation which breeds political and economic independence. Paerhaps

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In April (see here), I blamed the Democrats for failing to act on Constitutional Reform and losing any voice in the revision of the Alabama Constitution.  I wrote:

After years of having majorities sufficient to pass authentic constitutional reform in Alabama, but failing to address the issue at all, Alabama Democrats are to blame thank for whatever emerges as our new constitution. According to this article, the Alabama Republicans, seeing the strategic importance of constitutional reform, are quickly moving to seize control this issue.

The prospects for rational and deeply-considered revisions looked bleak back then.

Representatives and Senators from Prattville, Mobile, Auburn, Daphne, Homewood, and St.Clair County: now that is diversity of Alabama for you? Where is the black belt’s voice? Where is urban Alabama’s representative? For that matter: where is rural Alabama’s influence? These representatives will produce a constitution ideal for their respective constituents: affluent, white suburbia.

We can only hope that the internal backbiting, purity-tests, and power-jockeying within the Republican Party will cause some opening for reason.  Maybe Gov. Bentley, his puny three appointees, and Rep. DeMarco can, at least, be a temporary roadblock against he juggernaut of the super-majority, 11 appointees from the Riley/Hubbard/Marsh/ Bradley Byrne faction of the Party.

Robert Bentley has now made his appointments. These appointments do not exactly bring balance to the Commission for which I  had hoped. While former Governor Albert Brewer has been a long-time champion for constitutional reform, the other two appointments certainly counter-balance the wisdom he might bring to the commission. The remaining two:

  • “Becky Gerritson of Wetumpka . . . is currently President of the Wetumpka Tea Party.”
  • “Vicki Drummond, of Jasper, is an active member of the Alabama Policy Institute and the Heritage Foundation.”

Bentley said in a statement. “Vicki Drummond and Becky Gerritson have a dedicated passion and vision for exploring the need to reform the Alabama constitution.”

Governor, when have these ladies shown this “dedicated passion and vision” for constitutional reform? In what forum? Usually constitutional reform has not been a high priority of many Tea Party groups.

(UPDATE: according to Jennifer Ardis, a spokeswoman for Bentley, this Tea Party President and the API/Heritage Foundation activist have “an appreciation for what government should and should not do in the daily life of everyday Alabamians.”)

But it gets better.

Senator March named his appointees as well.  He named

  • Carolyn McKinstry, a survivor of the Sixteenth Street Baptist Church bombing in 1963;
  • Matthew Lembke, an attorney at Bradley Arant Boult Cummings. A appellate attorney with impressive credentials yet a member of the Federalist Society and typically represents major corporations. For instance, he “defended textile manufacturer in an environmental action alleging tresspass and nuisance claims relating to discharge of textile wastewater into a public lake.  On appeal from a jury verdict in favor of the plaintiffs, the Alabama Supreme Court reversed the judgment in favor of the plaintiffs and rendered judgment in favor of the defendant textile manufacturer.”
  • Jim Pratt, a Birmingham attorney, president of the Alabama State Bar and past president of the Alabama Association for Justice, a group representing trial lawyers.

Speaker Hubbard appointed:

A registered lobbyist? In the words of Keyshawn Johnson: “C’mon Man!”

Does this list look “inclusive and reflect the racial, gender, economic and geographic diversity of Alabama” and the Senate resolution demands?

Members from Rural Alabama? Zero. (Okay: one if you count Governor Albert Brewer being Morgan County.)

African-Americans Members? One out of 16 or (6.25%) while African-American represent 26% of the population in Alabama.

Female Members? Four (25%) while the lady folk represent 51% of the population generally.

White suburbia and corporations? I will let you count.

If this Commission reflects the “diversity” of Alabama, then Alabama is one big white, suburban enclave with as many registered lobbyists as there are African-Americans.

Thanks again, Democratic Majorities of years past.

 

1. We know that rural entrepreneurship is the key to economic recovery because thriving entrepreneurship provides the necessary flexibility and agility for rapid response to unexpected upheavals from Wall Street, or Japan, or China. However, Alabama ranks 47th in entrepreneurial activity.

2. We know that rural Alabama is the land of locally-owned, small businesses.

3. We know that long-term job security is dependent upon economic resilience within our local economies.

4. We know that localy-owned, small business growth is the key to rebuilding communities that have been devastated by unemployment.

5. We know that investments in local businesses double the productivity of the investment in out-of-state corporations.

If we believe these things, then why do our policies not match our words. Why do our policy-makers focus almost exclusively on recruiting large, out-of-state industries as the primary plank of economic development policy? Could it be that effective, rural economic development is not good for politicians.

As cited in this article:

Hammett said that since Alabama used the tax break to attract Mercedes, several other states have done the same thing, including Kentucky, Mississippi and Georgia, and Alabama needs to bring back the tax break to remain competitive.

Mike McCain, executive director of the Gadsden-Etowah County Industrial Development Authority, knows the impact of the Kentucky law firsthand. He said Gadsden competed with Mt. Sterling, Ky., for a Chef America frozen foods plant that would employ 900 people, and Kentucky won because it offered the income tax incentives to the maker of Hot Pockets.

If the concern is keeping business in-state, locally-owned business are dramatically less likely to up and leave when a better deal comes along. Those locally-owned businesses are rooted here.

These type of policies only create a race to the bottom. Another state will always be able to play the system and out-bid us through greater tax breaks, more immunity, less restrictions, more grants, and more corporate welfare. At what point do our policy-makers look out for the common good? Can they not see that we are being played.  At some point, we must stop begging to be abused, bullied, exploited.

Instead of just “giving tax breaks to big industry,” we can match our rhetoric with actions by modifying the Governor’s bills. We should dedicate these large investments to locally-owned businesses. Since locally-owned businesses are already rooted in our communities, let’s ease their growth.

  • At least 50% of these incentives should awarded to locally-owned enterprises and entities.
  • Add domestic content requirements which would ensure large percentages (60% perhaps) of the projects’ materials and supplies be produced and manufactured locally.
  • Let’s encourage meeting local needs, locally.  Require additional consideration and preference be giving to projects which will produce items that satisfy local demand and consumption.

These type tweeks generate much greater monetary velocity of each dollar invested than the current proposals and therefore cause greater economic health and resilience.  As I still argue, as here:

We import so much unnecessarily into our local economies. Job security and economic resilience cannot be achieved by focusing exclusively on recruiting big industries to Alabama. A balanced approach should be adopted which encourages the development of home-grown, import-substituting local manufacturers. We must identify the leaks of investment out of our local economies and enact policies which catalyze the local production of many items we now import. Only then can we have some peace of mind concerning a future prosperity.

Long term stability of our local economies and job security will not be achieved by the current models of economic development.